DoD TRICARE Contract Awarded to Health Net Federal Services for $1.94 Billion in Managed Care Support

Contract Overview

Contract Amount: $19,414,789,943 ($19.4B)

Contractor: Health NET Federal Services, LLC

Awarding Agency: Department of Defense

Start Date: 2010-05-13

End Date: 2025-08-25

Contract Duration: 5,583 days

Daily Burn Rate: $3.5M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Healthcare

Official Description: PROVIDE MANAGED CARE SUPPORT TO THE DEPARTMENT OF DEFENSE TRICARE PROGRAM. CONTRACTOR SHALL ASSIST MILITARY HEALTH SYSTEM IN OPERATING AN INTEGRATED HEALTHCARE DELIVERY SYSTEM COMBINING RESOURCES OF THE MILITARY'S DIRECT MEDICAL CARE SYSTEM AND THE CONTRACTORS MANAGED CARE SUPPORT TO PROVIDE HEALTH, MEDICAL AND ADMINISTRATIVE SUPPORT SERVICES TO ELIGIBLE BENEFICIARIES IN THE NORTH REGION.

Place of Performance

Location: RANCHO CORDOVA, SACRAMENTO County, CALIFORNIA, 95742

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $19.41 billion to HEALTH NET FEDERAL SERVICES, LLC for work described as: PROVIDE MANAGED CARE SUPPORT TO THE DEPARTMENT OF DEFENSE TRICARE PROGRAM. CONTRACTOR SHALL ASSIST MILITARY HEALTH SYSTEM IN OPERATING AN INTEGRATED HEALTHCARE DELIVERY SYSTEM COMBINING RESOURCES OF THE MILITARY'S DIRECT MEDICAL CARE SYSTEM AND THE CONTRACTORS MANAGED CARE SUPPOR… Key points: 1. This contract focuses on providing essential managed care support to the TRICARE program, impacting military healthcare delivery. 2. Health Net Federal Services, LLC, a significant player in federal health contracts, holds this award. 3. The contract's value of $1.94 billion over its duration presents a substantial financial commitment. 4. Competition was full and open, suggesting a robust bidding process for this critical service.

Value Assessment

Rating: good

The contract's value of $1.94 billion over its term suggests a significant investment in managed care support. Benchmarking against similar large-scale healthcare contracts for government programs is necessary for a precise pricing assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating multiple bidders participated. This method generally promotes competitive pricing and ensures the government receives the best value.

Taxpayer Impact: Taxpayers are funding essential healthcare services for military beneficiaries, with the expectation of efficient and effective delivery through competitive contracting.

Public Impact

Ensures healthcare access and quality for military personnel and their families. Supports the operational readiness of the military by maintaining a healthy force. Contributes to the stability and efficiency of the Department of Defense's healthcare system. Potentially impacts the broader healthcare insurance market through a major federal contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Contract duration and potential for cost overruns.
Complexity of managing integrated healthcare delivery systems.
Ensuring consistent quality of care across the North Region.

Positive Signals

Full and open competition likely secured competitive pricing.
Established contractor with experience in federal health programs.
Focus on integrated healthcare delivery aims for efficiency.

Sector Analysis

This contract falls within the Healthcare sector, specifically focusing on managed care support for government health programs. Spending benchmarks for similar large-scale federal healthcare contracts are typically in the billions, aligning with this award's magnitude.

Small Business Impact

The data indicates that small business participation was not a primary factor in this specific award, as the contract was awarded to a large entity and the 'sb' field is false. Further analysis would be needed to determine if subcontracting opportunities exist for small businesses.

Oversight & Accountability

The Department of Defense and the Defense Health Agency are responsible for oversight. The definitive contract structure and the duration suggest ongoing monitoring and accountability mechanisms are in place to ensure performance and fiscal responsibility.

Related Government Programs

Direct Health and Medical Insurance Carriers
Department of Defense Contracting
Defense Health Agency Programs

Risk Flags

Contract duration (over 15 years) increases exposure to market changes and potential cost escalations.
Complexity of managing a large integrated healthcare system presents operational risks.
Dependence on a single contractor for critical healthcare services.
Potential for scope creep or changes in service requirements over the contract life.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.41 billion to HEALTH NET FEDERAL SERVICES, LLC. PROVIDE MANAGED CARE SUPPORT TO THE DEPARTMENT OF DEFENSE TRICARE PROGRAM. CONTRACTOR SHALL ASSIST MILITARY HEALTH SYSTEM IN OPERATING AN INTEGRATED HEALTHCARE DELIVERY SYSTEM COMBINING RESOURCES OF THE MILITARY'S DIRECT MEDICAL CARE SYSTEM AND THE CONTRACTORS MANAGED CARE SUPPORT TO PROVIDE HEALTH, MEDICAL AND ADMINISTRATIVE SUPPORT SERVICES TO ELIGIBLE BENEFICIARIES IN THE NORTH REGION.

Who is the contractor on this award?

The obligated recipient is HEALTH NET FEDERAL SERVICES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Health Agency).

What is the total obligated amount?

The obligated amount is $19.41 billion.

What is the period of performance?

Start: 2010-05-13. End: 2025-08-25.

What are the key performance indicators (KPIs) used to measure the effectiveness of Health Net Federal Services' managed care support for TRICARE?

Key performance indicators likely include beneficiary satisfaction rates, access to care metrics (e.g., appointment wait times), quality of care measures (e.g., adherence to clinical guidelines), and administrative efficiency. The Defense Health Agency would establish and monitor these KPIs to ensure the contractor meets contractual obligations and provides high-quality healthcare services to eligible beneficiaries.

What are the primary risks associated with a contract of this magnitude and duration for managed care support?

Primary risks include potential cost overruns due to unforeseen healthcare utilization or inflation, challenges in maintaining consistent quality of care across a large region, and contractor performance issues that could disrupt beneficiary services. Ensuring robust oversight, clear performance standards, and contingency planning are crucial to mitigate these risks.

How does this contract contribute to the overall value proposition of the TRICARE program for beneficiaries?

This contract is central to delivering the TRICARE program's value by ensuring beneficiaries have access to a comprehensive network of healthcare providers and services. Effective managed care support streamlines healthcare delivery, potentially improving patient outcomes, reducing administrative burdens, and providing a predictable healthcare experience for military families.

Industry Classification

NAICS: Finance and Insurance › Insurance Carriers › Direct Health and Medical Insurance Carriers

Product/Service Code: MEDICAL SERVICES › GENERAL HEALTH CARE SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: H9400207R0007

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 2025 AEROJET RD, RANCHO CORDOVA, CA, 95742

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $19,414,789,993

Exercised Options: $19,414,789,993

Current Obligation: $19,414,789,943

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline